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| Term | Meaning |
|---|---|
| Labour | Physical or mental effort; work. |
| Laissez-faire | Doctrine that interference of government in business and economic affairs should be minimal. |
| Last in, first out (LIFO) | Accounting method of valuing inventory under which the costs of the last goods acquired are the first costs charged to expense. Commonly known as LIFO. |
| Lay off | Reduce the risk in standby commitment, under which the bankers agree to purchase and resell to the public any portion of a stock issue not subscribed to by shareholders who hold rights. |
| Lease | Conveyance of land, buildings, equipment or other assets from one person (lessor) to another (lessee) for a specific period of time for monetary or other consideration, usually in the form of rent. |
| Lease acquisition cost | Price paid by a real estate limited partnership when acquiring a lease, including legal fees and related expenses. |
| Lease-purchase agreement | Agreement providing that portions of lease payments may be applied toward the purchase of the property under lease. |
| Leasehold | Property interest a lessee owns in the leased property. |
| Ledger | Any book of accounts containing the summaries of debit and credit entries. |
| Ledger account | A complete record of the transactions recorded in each individual account. |
| Lender | Individual or firm that extends money to a borrower with the expectation of being repaid, usually with interest. |
| Lending securities | Securities borrowed from a broker’s inventory, other margin accounts, or from other brokers, when a customer makes a short sale and the securities must be delivered to the buying customer’s broker. |
| Lessee | Person or entity that has the right to use property under the terms of a lease. |
| Lessor | Owner of property, the temporary use of which is transferred to another (lessee) under the terms of a lease. |
| Letter of Credit | Conditional bank commitment issued on behalf of a customer to pay a third party in accordance with certain terms and conditions. The two primary types are commercial letters of credit and standby letters of credit. |
| Letter of Intent | Any letter expressing an intention to take an action, sometimes subject to other action being taken. |
| Leverage | The use of borrowed funds to increase the profit from an investment. |
| Leveraged buy out | Acquisition of a controlling interest in a company in a transaction financed by the issuance of debt instruments by the acquired entity. |
| Leveraged lease | Transaction under which the lessor borrows funds to acquire property which is leased to a third party. The property and lease rentals are security for the lessor’s indebtedness. |
| Liability | Debts or obligations owed by one entity (debtor) to another entity (creditor) payable in money, goods, or services. |
| Lien | Creditor’s claim against property. For example, a mortgage is a lien against a house. |
| Life expectancy | Age to which an average person can be expected to live, as calculated by an actuary. |
| Lifetime learning credit | This allows a credit for 20 percent of qualified tuition and fees paid by the taxpayer with respect to one or more students for any year that the Hope Scholarship Credit is not claimed. |
| LIFO liquidation | The reduction of inventory levels at year’s end below beginning-of-the-year levels for businesses using the last in, first out (LIFO) inventory method. |
| Limited company | A company, usually registered in the United Kingdom, that is organized to protect its owners from financial responsibility. |
| Limited liability | The obligation of owners of a corporation, who are liable only for the amount of their investment and are not liable for the corporation’s debts. |
| Limited liability company (LLC) | Form of doing business combining limited liability for all owners (called members) with taxation as a partnership. An LLC is formed by filing articles of organization with an appropriate state official. Rules governing LLCs vary significantly from state to state. |
| Limited liability partnership (LLP) | General partnership which, via registration with an appropriate state authority, is able to enshroud all its partners in limited liability. Rules governing LLPs vary significantly from state to state. |
| Limited partnership | Partnership in which one or more partners, but not all, have limited liability to creditors of the partnership. |
| Liquid assets | Cash, cash equivalents, and marketable securities. |
| Liquidation | Winding up an activity by distributing its assets to the appropriate parties and settling its debts. |
| Liquidity | Available money on hand to pay bills when they are due and to take care of unexpected needs for cash. |
| Liquidity ratio | Measure of a firm’s ability to meet maturing short-term obligations. |
| Litigation support/dispute resolution | A service that CPAs often provide to attorneys – e.g., expert testimony about the value of a business or other asset, forensic accounting (a partner stealing from his other partners, or a spouse understating his income in a matrimonial action). The lawyer hires the CPA to do the investigation and determine the amount of money stolen or understated. |
| LLC | Form of doing business combining limited liability for all owners (called members) with taxation as a partnership. An LLC is formed by filing articles of organization with an appropriate state official. Rules governing LLCs vary significantly from state to state. |
| LLP | General partnership which, via registration with an appropriate state authority, is able to enshroud all its partners in limited liability. Rules governing LLPs vary significantly from state to state. |
| Loan | Transaction wherein an owner of property, called the lender, allows another party, the borrower, to use the property. |
| Loan value | Amount a lender is willing to loan against collateral. |
| Long bond | Bond that matures in more than 10 years. |
| Long term | Holding period of six months or longer, according to the Tax Reform Act of 1984 and applicable in calculating the capital gains tax until 1988. |
| Long-term asset | An asset that has the following characteristics: (1) it has a useful life of more than one year; (2) it is acquired for use in the operation of a business; and (3) it is not intended for resale to customers. |
| Long-term debt | Debt with a maturity of more than one year from the current date. |
| Long-term gain | Subsequent to the Tax Reform Act of 1984 and prior to provisions of the Tax Reform Act of 1986 effective in 1988, a gain on the sale of a capital asset where the holding period was six months or more and the profit was subject to the long-term capital gains tax. |
| Long-term investment | An investment that management plans to hold for more than one year. |
| Long-term liability | A debt that falls due more than one year in the future or beyond the normal operating cycle, or that is to be paid out of noncurrent assets. |
| Long-term loss | Negative counterpart to long-term gain as defined by the same legislation. |
| Loss | Excess of expenditures over revenue for a period or activity. Also, for tax purposes, an excess of basis over the amount realized in a transaction. |
| Loss on Disposal of Plant and Equipment | The account in which a loss is recorded when a firm sells or trades in an asset and receives an amount less than the book value for that asset. |
| Lower of Cost or Market | Valuing assets for financial reporting purposes. Ordinarily, “cost” is the purchase price of the asset and “market” refers to its current replacement cost. Generally Accepted Accounting Principles (GAAP) requires that certain assets (e.g., inventories) be carried at the lower of cost or market. |
| Lump-sum distribution | Single payment to a beneficiary covering the entire amount of an agreement. |